June 30, 2000
ROLLOVER OF MRF 1998 II LIMITED PARTNERSHIP
Middlefield Mutual Funds Limited
(MMF) is pleased to announce that, in connection with the
dissolution of MRF 1998 II Limited Partnership effective June 29, 2000
all of the assets of the Partnership were transferred to Middlefield Mutual
Funds Limited, an open ended mutual fund, in exchange for the
equivalent value of shares in MMF- Growth Class. For the purposes of the
exchange, the net asset value of the Partnership was $552.49 per unit. As a
result of the rollover, the total net assets of MMF- Growth Class increased
from $49,000,000 to $73,200,000.
The transfer is a tax free exchange which
means that no disposition occurs and therefore no capital gains tax is payable
as a result of the rollover. The capital gains tax liability which would
arise upon disposition can be deferred by retaining the shares of the mutual
fund rather than redeeming them. In the event of redemption, the capital
gains will be included in the shareholders tax return for that year when the
shares are redeemed. Commencing in September, investors will have the
opportunity to switch into other classes of mutual funds and still be able to
defer capital gains taxes until they actually redeem their mutual fund shares
New MMF- Growth Class shareholders can
determine their holdings by multiplying the number of units they held in the
Partnership by 106.42. There are no fees charged on the transfer of units into
MMF, nor on any redemption of the transferred assets. MMF is a no load fund
which is RRSP eligible.
For further information, contact:
J. Dennis Dunlop
(416) 362-0714 J
March 22, 2000
ROLLOVER OF PARTNERSHIP
Middlefield Growth Fund Limited and
MRF 1998 II Limited Partnership, jointly announced today that, in
connection with the planned dissolution of the Partnership, they are proposing
a transfer of all of the assets of the Partnership to Middlefield Growth
Fund in exchange for mutual fund shares having the same aggregate net asset
value as the aggregate net asset value of the Partnership. Appropriate
elections under applicable income tax legislation will be made to effect the
transfer on a tax-deferred basis.
The transfer is conditional upon (i)
approval being obtained from the partners of the Partnership at a meeting
called for that purpose and (ii) the receipt of all necessary regulatory
approvals. It is currently intended that, if all necessary approvals are
obtained, the transfer of assets to Middlefield Growth Fund and the
subsequent dissolution of the Partnership shall occur on or about June 30,
The transfer has been proposed so as to
provide greater benefits to both the partners of the Partnership and to the
shareholders of the Mutual Fund from participating in a larger, more liquid
It is anticipated that by the time the
transfer occurs, the Growth Fund shares will be exchangeable on a tax-free
basis into other Middlefield mutual funds. Investors will then have the
opportunity to diversify into other types of funds and will still be able to
defer capital gains taxes payable upon disposition of their investment until
they actually redeem their mutual fund shares. This new arrangement is, of
course, subject to shareholder and regulatory approval.
For further information, contact Nancy
Tham or the undersigned:
J. Dennis Dunlop
Senior Vice President
We continue to be encouraged by the
fundamental strength of the sector, which has yet to be reflected in the stock
prices of our largest portfolio holdings: Burlington Resources, Tri Link
Resources and Numac Energy. The investment portfolio as at March 29, 2000 was
|Burlington Resources Inc.
|Tri Link Resources Ltd.
|Numac Energy Inc.
|Canadian 88 Energy Corp.
|Merit Energy Ltd.
The price of crude oil is close to its
high for the past decade and natural gas prices are strong, yet the stock
market could not seem to care less. Market watchers call this phenomenon a
"disconnect", by which they mean a decoupling of two things that are or
should be closely linked. Unless the market knows something that no one
else does, there are many stocks available at bargain prices in the oil and gas
Real value cannot be ignored forever. Not
only is real value in the form of cash flow being created in oil and gas, but
also the price for this value is now cheaper than it has been for a long time.
Energy stocks are discounting a crude oil price of less than U.S. $20 a barrel
average for the full year 2000 which seems a highly unlikely scenario viewed at
this point in time. As well, major gains in the U.S. market are being made by
the Canadian natural gas industry. Natural gas exports are growing at over 10%
per annum with the export prices rising by over 15% as Canadian and U.S.
wellhead prices continue to converge. Our largest stock position, Burlington
Resources Inc. (BRX : TSE), as a major natural gas producer, is well positioned
to participate in this growth. Its stock price during the past two weeks has
risen over 20%.
There does not seem to be any compelling
reason why stocks of most oil and gas companies are trading at multiples to
cash flow substantially below the historical average for the industry. This
leads us to conclude that the oil and gas group is significantly undervalued
and that if our view is correct, the sector should see strong equity price
appreciation over the next 12 to 18 months.